Ugandan Retailers Decry Heavy Taxes in Burundi

Retailers in Uganda are denouncing the Burundian government's taxes, found to be higher than those elsewhere in the East African Community (EAC). Some companies have relocated to other countries in the region. Burundian retailers are left operating at a loss.

Jean Nziza is one of many small business owners operating in Burundi's northern provinces of Ngozi and Kirundo. He often crosses the Rwandan border. "We do not see any improvements in our business since Burundi joined the East African Community," he says. Like fellow Burundian retailers who regularly travel to other EAC countries, he is concerned by high taxes the Burundi Revenue Authority (OBR) has charged since the country joined the EAC's single market in July 2010.

Devalued currency

The story of Mathilde Nizigama is typical. By 5 a.m., the mother of three girls is already waiting at the Buyenzi bus station. From here, in Burundi's capital city Bujumbura, she catches a bus bound for Kampala.

Holding in her hand 27,000 Burundian francs, the equivalent of 16 euros, she queues to board one of the Horizon coaches. During the fifteen-hour journey, Nizigama relays her exhaustion. She speaks of the problems she faces as a retailer, namely the local currency losing its value. "The dollar rate in Burundi is constantly going up," she says. We barely get by with our little revenues."

Illiteracy poses another problem for Burundian small business owners. At every border post, Nizigama, who can neither read nor write, must wait a little longer for someone to help her fill in the forms. "Most of us have never been to school. Once in Uganda, we have to hire an agent to do our purchases and they are often quite expensive," she says.

Together with other retailers, Nizigama returns to Bujumbura five days later. The buses linking Kampala to Bujumbura leave at 9 p.m. The ticket costs 55,000 schillings, also about 16 euros.

But the difficulties Nizigama and other Burundian retailers face are not limited to the long, exhausting journey. Even more hassles await back home.

Operating at a loss

Problems started over a year ago, when Burundi joined other EAC countries to form a free trade area. The new tax regime followed suit. Through the revenue authority, the Burundian government has so far collected a sum exceeding 235 million euros.

As far as Nizigama is concerned, the OBR is overtaxing her. "Sometimes we return without our goods. We pay agents who send them later. We receive them late and cannot make any profit because of the revenue authority," she explains. "We are forced to reserve extra money to pay for the taxes. We are operating at a loss."

Why the contention?

Just why are the OBR taxes regarded as illegal? A point of contention between retailers and the OBR is a good's certificate of origin.

Returning from Uganda with Nizigama, Anne Nshimirimana complains that the proof presented to the revenue authority is often discredited. "The OBR rejects our certificates, claiming that they are fraudulent. The fiscal body prefers to conduct its own investigation and ends up double taxing," she explains.

Deputy general commissioner of the OBR Domitien Ndihokubwayo insists that most retailers present fraudulent certificates of origin. "There are no taxes charged on goods manufactured in EAC countries. However, when goods imported into Burundi have been manufactured in China or India, for example, they are subjected to tax. That is why we require certificates of origin," says Ndihokubwayo. "When we find irregularities, we have the right and authority to tax the same goods again."